Fixing the Economy is Easy

Remember the H Ross Perot campaign? Ross spent 60 million of his own money to warn us about the “huge sucking sound” that would pull all our highest paying manufacturing jobs from this country if trade agreements were signed. Over the next twelve years Clinton and the Bushes signed several. The economy didn’t immediately go on a downward spiral because interest rates were lowered from 10-14% to 4-6%. That started a housing boom which hired many into the building industry and increased the equity/wealth of Americans so that they could get home equity loans and buy foreign made product.

We know how that came to an end. When the economy started to shrink, housing costs fell, Americans spent less. Fewer houses were purchased. People defaulted on their mortgages. Banks failed and loaned less money. Then the whole economy was on the verge of complete shutdown. Trillions were spent to keep it from absolute failure.

Jobs would have brought it back. People would have had the jobs to have bought the bargain real estate, but the jobs were outsourced, production had shifted overseas. Millions of manufacturing jobs had been lost never to be recovered. H Ross Perot’s dire warnings had finally become reality.

The solution is the same as it has been throughout the first 350 years of America’s existence: tariffs & protectionism. Protectionism isn’t a bad word. In fact it’s a good word. The ONLY right of our government is to protect our rights. We should be protected against invasion. We should be protected against criminals, fire and disaster.

Why should we have child labor laws in this country and then ship our jobs overseas to countries that use child labor?

Nobody has ever presented a valid argument in favor of free trade and against protectionism. OK, the sole argument is that it is supposed to be good for the world, but it actually isn’t even that. Unemployment isn’t good for anyone. Jobs are supposed to go to the country that can manufacture the cheapest. That’s the defective theory, anyway.

So what to do that’s a compromise that won’t disrupt the Asian manufacturers? This is the proposal #1:

Put a sales tax on all products that compensates for the wage difference between countries. Call it the standard world wage. Calculate the cost that would be added to the product were it produced with standard labor rates. If a country has lower than average wages, that country’s products would have a sales tax that would effectively bring the price of that country’s products up to the price they would have if manufactured with labor that was at the world average. Each country could put a sales tax on their own products and also generate tax revenue.

Adjustments could be added to compensate for child labor laws, corporate taxes and other government generated regulations.

Let’s level the playing field

The economy has been on a downward spiral since free trade started. Yes, America was expected to lose manufacturing jobs. America lost millions of manufacturing jobs. Those people never got their jobs because everyone is pigeonholed; an engineer can’t get a job as a technician or as a lawyer or doctor. Manufacturing workers can’t get jobs in construction. Perhaps there would be crossover from one industry to the next if there were more good jobs than people, but that isn’t the case. Outsourcing and free trade agreements discriminated unfairly against some Americans.